Utilities:

EnergyWire's electric utilities reporter Rod Kuckro spent last week speaking with the country's top investor-owned utility CEOs at the Edison Electric Institute's annual meeting. What did they have to say about the evolving utility business model and the challenges posed by U.S. EPA's existing power plant proposal? On today's The Cutting Edge, Kuckro gives a behind-the-scenes look at his coverage and conversations with the industry's leading decisionmakers.

Transcript

Monica Trauzzi: Welcome to The Cutting Edge. EnergyWire reporter Rod Kuckro spent last week at the Edison Electric Institute's annual conference where he had the opportunity to speak to a number of leading utility CEOs about the rapid changes affecting their industry. Rod, a lot of interesting stuff coming out of this conference, and you picked up on some key differences between what the D.C. business crowd is saying and what politicos are saying about EPA's power plant regulations and what you heard from these CEOs. Talk about some of those differences.

Rod Kuckro: Well, you know, it's often said that Washington is a different reality from the rest of America. It was really true in Las Vegas. When you talk to the CEOs, they are not as exercised as the political lobbies on K Street about the EPA power plant rules. They seem to be at a point of acceptance. Maybe, you talk about stages of grief, they were in denial and they were angry several years ago when this was coming down the pike, but now they're accepting it and they're thinking about how can I best meet these rules for my shareholders and my customers without sort of breaking the bank.

Monica Trauzzi: Are they as concerned about all the retiring coal plants that we're hearing about as the coal state lawmakers are?

Rod Kuckro: You know, I'd have to say, on large part, no they're not because they know these assets are old. I mean, a lot of those coal plants, as you know, are 40, 50, 60 years old. They've lived a useful life. What they don't want to see is coal plants that are 30, 20 years old where they invest money already in emissions controls for other types of pollutants. They want to see those assets be able to live their useful life and not sort of be a drain on their bank accounts. So, yeah, they're already in the process of closing coal plants. In fact, we know a lot of coal plants have closed in the past two years just because they've outlived their lives.

Monica Trauzzi: So why do you think there's such a disconnect on the messaging between what's happening in this town and what's happening around the country?

Rod Kuckro: I think it's politics, Monica. I think it's about this election coming up this November and probably the 2016 election. You always need to have a bogey man if you're running against, you know, the incumbent president and the incumbent sort of administration, and EPA is a great bogey man to have on your side if you're Republican right now.

Monica Trauzzi: So the keynote speaker at the conference was Warren Buffett, and he decided to weigh in on the distributed generation and net metering debate. Did he make a strong business case for why utilities should give consumers what they want?

Rod Kuckro: He made a very strong business case. In fact, he said, "I have $15 billion of my own money that I'm willing to bet in the next year or two on buying more solar assets and investing more money in the utilities I already own to give customers what they want." I mean, his main message to these utilities CEOs was listen to public opinion. Don't try to buck the trend. And, in fact, what you're seeing now among utilities CEOs is that they're talking more and more about trying to find ways to give people solar power on their rooftops if they want it, as long as they pay some sort of fee back to the utility to help pay for the maintenance of the grid.

Monica Trauzzi: We hear a lot about utility pushback to the evolving business model. Did you get a sense of that from your conversations with the CEOs?

Rod Kuckro: Not the CEOs I spoke to. The CEOs I spoke to, Nick Akins, Leo Denault of Entergy, Tom Fanning of Southern Company, they operate in multiple states. I mean, they've seen this change coming down the pike for some time, and they are, in their own separate ways, trying to find ways to make it work for them, and some of them are actually embracing the change, thinking that they can actually sort of outrun their competition.

Monica Trauzzi: And you're working on a story for next week on a new branding campaign that the industry will be launching. Give us a preview.

Rod Kuckro: Yes. Well, the utility industry's always been very stodgy, and Edison Electric is maybe the stodgiest of all but they are engaging a New York strategic communications firm to launch what they're going to call We Stand for Energy campaign. It relies on social media, the Internet, you know, force feeds of news, trying to get people to understand the value behind flipping a switch and getting actually the lights to turn on, and what it's all really about is money because they're committing $90 billion or more this year and probably the foreseeable 10 years to upgrade the grid to pay for cybersecurity implementation, and they want people to understand that flipping the switch doesn't come without a cost.

Monica Trauzzi: All right, Rod. Interesting stuff. Thank you for coming on the show.

Rod Kuckro: You're welcome. Thank you, Monica.

Monica Trauzzi: More Cutting Edge coming next Friday. We'll see you then.